FTA Issues Public Clarification on Corporate Tax for Newly Established Companies

**Title:** FTA Issues Public Clarification on Corporate Tax for Newly Established Companies

**Abu Dhabi, UAE – August 13, 2024:** The Federal Tax Authority (FTA) has released a Public Clarification to raise awareness about the first Tax Period applicable to newly established companies, specifically juridical persons subject to Corporate Tax. This Clarification emphasizes that the first Tax Period is determined by the company's first Financial Year as per the Commercial Companies Law. The Corporate Tax Law applies to Tax Periods commencing on or after June 1, 2023, and the Tax Period for the Taxable Person is defined as the Financial Year or part thereof for which a Tax Return must be filed.

The Public Clarification provides detailed guidance on determining the first Tax Period for Corporate Tax purposes. For companies whose first Financial Year begins on or after June 1, 2023, this Financial Year will be recognized as the first Tax Period. If the Financial Year spans between 6 and 18 months, the FTA will accept this as the first Tax Period without requiring a special application for change.

The FTA also outlined the procedure for Tax Deregistration in cases where a company ceases its business activities before or during the first Tax Period. In such scenarios, the Taxable Person is required to apply for Tax Deregistration within three months of the cessation event.